March 5, 2005

Zany, bogus scams don't fool insurers

If you ask the average law-abiding Canadian the total value of the contents
of his or her home, you will probably get a fairly good attempt at an honest
answer.

But if you ask the same person the same question after those contents have
been damaged or stolen, the value might be significantly higher.

Back in 1996, the Insurance Bureau of Canada (http://www.ibc.ca) created the
Great Canadian Ethics Challenge to test the honesty of Canadians in an
insurance context. Overall, the majority of Canadians polled said they would
act ethically in most of the scenarios; but they were far less confident
that their fellow citizens would under identical circumstances.

For example, in response to a scenario in which a bank machine gives a
customer more money than it recorded on the bank receipt, 69 per cent of the
people surveyed said they would report the error to the bank but they
thought only 22 per cent of other Canadians would do the same.

Every year, the Canadian Coalition Against Insurance Fraud releases its top
10 list of the zaniest insurance frauds of the previous year. Here are some
of my favourites from the CCAIF list of frauds in 2004. The stories are
true.

Para
illegal: Paralegals are supposed to be an inexpensive alternative to
lawyers, but for the clients of one paralegal it proved to be a very costly
choice. The paralegal claimed to be a "specialist" in settling auto
insurance cases. Indeed, he turned out to be very successful in settling
claims. The problem was he didn't share the good news with his clients and,
instead, pocketed their money. Not that he was always indifferent to his
clients' suffering; sometimes this thief would give clients half of their
settlement and keep the rest. Eventually, investigators caught on and the
jig was up.

Rock heads:
This rock band wasn't particularly successful but its members, unlike most
starving musicians, weren't prepared to suffer for their art. Some of them
decided to make insurance companies and their policyholders do the
suffering. They decided to stage a car accident. They deliberately inflicted
vehicle damage in an underground garage, then they told a tale of pain and
suffering that started the claim money rolling in. They were all represented
by the same paralegal and collected more than $150,000. Meanwhile, their
music career took a sudden upward turn when they scored a great gig.

This would prove to be their downfall. The insurance companies noticed that
they were being billed for treatments the claimants were supposedly
receiving in Toronto, while in fact, the rockers were jumping up and down on
stage out of the province.

All
in the family: This group of criminals had a simple motto: If it worked
once, try it again and again. The first accident seemed straightforward
enough. Two cars had collided and the insurance companies paid out almost
$50,000 in accident benefit claims to the apparent victims. A month later,
the unlucky woman who was in the first accident was involved in another,
along with family members of other people involved in the first accident.
Then, just two months later, another accident produced more claims and,
again, some familiar names appeared on the report. Also, the same car was
involved in the second and third accidents, and emerged from both with the
exact same physical damage. For this fraud ring, it proved to be three
strikes and you're out. An investigation revealed that all three accidents
had been staged. The
phantom passenger: Maybe Joe (not his real name) was jealous of the
cheques his friend was receiving or maybe he simply saw an opportunity.
Either way, his scheme was inspired by his friend's car accident and the
prospect of a claims payout for himself as well. Joe declared that he, too,
had been in the car, filed a claim and began receiving cheques. It all
seemed to be going well until the driver of the other car involved in the
collision pointed out to investigators that no one matching Joe's
description was in the friend's car.
Humming hymns in Krakow: Shipping stolen vehicles overseas has become
one of Canada's fastest growing export industries. Often, high-end vehicles
are crated and loaded onto cargo ships even before their owners know they
are missing. In this case, though, the owner of a brand new Hummer knew
exactly where it went. He bought the Hummer, used bogus employment and
financial information to arrange a loan to help cover the $100,000-plus
sticker price and took out insurance. Then he shipped the vehicle to Poland.
The scam was discovered when the Polish police seized the car. It was being
driven around Krakow by "a high-ranking church official." The man hasn't
confessed to taking part in the scam, at least not to any earthly authority.

If you're tempted to bend the truth on your next insurance claim, think
again. The insurance companies have heard it all before and they're experts
at uncovering bogus claims.

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Bob Aaron is a Toronto real estate lawyer. He can be reached by e-mail at bob@aaron.ca,
phone 416-364-9366 or fax 416-364-3818. Visit
http://www.aaron.ca

Bob Aaron is a Toronto real estate lawyer. He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.Visit the Toronto Star column archives at http://www.aaron.ca/columns for articles on this and other topics or his main webpage at www.aaron.ca.